Rural hospitals could suffer due to ACA cuts & no Medicaid expansion

MONTGOMERY, AL (WSFA) -

Rural hospitals could be at risk of possible closure due to Alabama not expanding Medicaid and the federal government making cuts for uncompensated care, known as Disproportionate Share Hospital Payments (DSH).

"I do believe it will affect some hospitals and I do believe some will close, yes" said Chris Griffin, the Administrator at D.W. McMillan Memorial Hospital in Brewton, AL.

According to figures compiled by the Alabama Hospital Association, hospitals in the state could lose as much as $16 million for uncompensated care in 2014, $32 million in 2015, and $200 million in 2020.

Griffin said, ,"It's hard to make it work anyway but as those payments decline it will be difficult to supplement the revenue streams for the hospital.

It isn't just the hospital Brewton that could face serious funding issues starting next year. All rural hospitals, many of them already struggling to make ends meet, will face increased costs due to the population of individuals with healthcare remaining largely stagnant.

Hospitals like McMillan in Brewton serve vital roles because in many instances they are the only major medical facility for miles.

"The nearest hospitals are in Pensacola and Mobile" Griffin said. "If people show up, we provide care. The care is being provided and that I think was one of the points the governor was trying to make we're making today. Our hospital will lose a substantial amount of money in the current operating year and yeah it's only going to get worse."

Alabama's Governor Robert Bentley said last week that he had concerns for the future of many rural hospitals. He urged all hospitals in the state to do their best to handle the upcoming financial "tough times" by operating efficiently and by making sound fiscal decisions.

Medicaid expansion could, in theory, financially help hospitals in the state. Griffin, with McMillan Memorial, said the premise of the law was that hospitals would have to pay less for uncompensated care while more patients with adequate insurance could receive care and be able to pay for the services.

"We hoped that would happen so we could keep trying to morph the healthcare model," Griffin said.

Expanding Alabama's Medicaid program would provide healthcare for approximately 300,000 new eligible patients, according to multiple studies. It would cost the state approximately $700 million over six years to pay for the expansion, but it could also lead to more than $1.2 billion in new tax revenue as well as 30,000 jobs.

If Alabama doesn't expand Medicaid, making it possible for more people to receive care who could pay for it could be a financial windfall for hospitals. Without expansion, and any kind of new revenue, Griffin wonders what the future holds.